Rinehart's raid to herald media shake-up

Adele Ferguson

Gina Rinehart's raid on the share register of Fairfax Media is a sign of things to come in the media industry with cross ownership laws set to loosen further once the government releases its final version of a review into media convergence.

Rinehart's motivation to increase her stake in Fairfax is more about wielding influence and gaining political access in the corridors of Canberra than having a seat at the table in any takeover possibilities. That said, she also wants a say on the direction of the media group and the possibility of a new owner emerging.

When a few radio stations were put up for sale in regional mining towns such as Mt Isa Rinehart is understood to have called her friend John Singleton to ask him if he was going to buy them. She told him, she would be happy if he was, but worried if “they fell into the wrong hands.”

To Rinehart the wrong hands are people who don't share her view of politics. She has extreme views on the future of Australia and economic policy settings and like her father Lang Hancock, believes the media is the most powerful way to influence change.

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While traditional media has taken a pummelling on the sharemarket, it still is the most effective way to pressure governments for change and get messages out. Rinehart is a big fan of online communication, writing for online mining publications, and Fairfax has the most powerful websites in the country. (Fairfax is the publisher of this website.)

Political donations to influence policy direction are too blatant to influence governments and Rinehart has spent little over the years filling the coffers of any political party. Her biggest flurry was in 2010 when she helped fund a lobbying effort to axe the mining tax. To that end she pumped in hundreds of thousands of dollars to help her cause.

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After last night's share raid, Rinehart is sitting on 10 per cent of Fairfax. She had hoped to get that stake to 15 per cent but at 81 cents a share, investors obviously felt it was too cheap an offer.

The expectation now is she will get her brokers to step into the market and buy another 4 per cent of Fairfax at market price.

Gina Rinehart's Fairfax foray may be the first of many moves in the media industry. Photo: Rick Rycroft

At these prices, though, the outlay is loose change to Rinehart, who is valued at more than $20 billion when iron ore prices are trading at $US140 a tonne.

Fairfax's share price was recently sitting at 81 cents, which is a far cry from her average entry price of $1.41 in late 2010 and early 2011.

Her move onto the board has intensified the debate on the future of media and its role in society. She took a 10 per cent stake in Ten Network in late 2010, along with a board seat, and she will undoubtedly be keen to take a seat on the Fairfax board.

Talkback radio has been inundated with callers this morning fearful of what it means to have the richest person in the country, and one of the richest women in the world, moving into the media sector.

Fairfax has prided itself on its independence and so the chances of her redirecting editorial content are slim. But perception can become reality and the company will have to make sure that it doesn't look like she is wielding influence.

aferguson@fairfaxmedia.com.au

Adele Ferguson's biography of Gina Rinehart will be published in late May.